By Marcus Daniels

MISSISSIPPI STATE -- Newlyweds face a variety of challenges, many of which stem directly from the financial decisions all couples must make.

“Problems with family finances are the No. 1 cause of marriages breaking up,” said Susan Cosgrove, area family resource management agent with the Mississippi State University Extension Service.

Couples may bring large debt into the marriage or can easily get over their heads in debt very quickly. It takes hard work and a true commitment to achieve financial goals.

“Newlyweds can avoid problems by addressing money management issues even before they get married,” Cosgrove said. “Each person should be aware of his or her financial state, and communicate about it to the other partner. Once awareness is established, it is easier to meet financial goals.”

A tendency to not live within the means of the budget and problems distinguishing between wants and needs are just two of the issues couples and families face. The first step is to create a family budget, which is an important factor in securing a stable financial future.

“The family financial budget is a road map for accomplishing financial goals,” Cosgrove said. “The basic steps of establishing a written family budget include: determining family income, setting goals and determining needs versus wants.”

Make a list of all sources of income and when they arrive -- weekly, bi-monthly, monthly, quarterly or yearly. Also make a list of all amounts and due dates of fixed expenses -- mortgage/rent, installment payments, vehicle notes and insurance. Document variable or flexible expenses such as food, personal expenses, clothing, utilities and transportation.

List occasional or periodic expenses also. These occur once or a few times a year and include gifts, taxes, subscriptions, dues, insurance and licenses/fees.

“Make the budget or spending plan by taking income and allocating it to the different expenses. To implement the budget, monitor expenses and watch spending habits,” Cosgrove said. “Don't think you can get it right on your first attempt. You will get better at this process as you work on it. Be patient and make adjustments where needed.”

Handling checking accounts is one of the more difficult tasks couples face. Some choose separate checking accounts, and others opt for joint checking accounts. Some couples have both.

Financial planners and advisors like Cosgrove suggest couples make this decision based on what best fits their situation. If using a joint account, each must be accurate in recording expenses and other transactions. If separate, they must agree on who is responsible for which expenses.

Credit is another important aspect of financial planning.

“Establishing and maintaining good credit is a must, but be wise and don't overdo the use of credit,” Cosgrove said. “Don't use credit for everyday expenses.”

Shop for low annual percentage rates, check out the fees and always read all of the small print on credit card contracts. Also, don't fall for the 0 percent or very low introductory annual percentage rates. The fine print will show how long this low rate will last.

If couples accumulate a lot of debt, they may want to seek help from a financial advisor.

“If you select professional advisors who charge fees, do some research on their effectiveness and reliability. If anything sounds too good to be true, let this be a red flag. Check out all the details and you may find a catch,” Cosgrove said.

Mary Linda Moore, an Extension family resource management agent in Corinth, said people usually come to her wanting to know ways of getting out of debt.

“When people are using 20 percent of their annual income to pay off debt, that's usually not a good sign,” Moore said.

When climbing out of debt, take account of income and expenses on a balance sheet to see where the family financial situation stands.

“For at least a month, keep track of where every penny is being spent,” Moore said.

Once it is established where all the money is going, make cutbacks where necessary.

“Some people may want to cut their house phone and keep their cell phone or go without cable,” Moore said. “Most of us can afford to cut our grocery bills by 50 percent.”

The saved money from cutting back can go toward eliminating debt.

“Target credit card debt with higher interest rates first,” Moore said.

Another way to combat debt is to get a second job or a temporary job where the money made goes solely toward paying off a particular debt, Moore said.

Financial planners suggest living below means to avoid financial problems. Establish an emergency fund equal to at least two to six months of income set aside for use in case of loss of job or disasters. Keep good financial records.

For information on household recordkeeping, contact an area family resource management agent through the county Extension office.